Book Review: Early Exits: Exit Strategies for Entrepreneurs and Angel Investors

“>As someone several years into a successful venture backed enterprise software startup, I find myself spending a lot of time looking at the green grass on the other side of the startup fence: angel funding and quick flips. People have mixed opinions on flipping, both the practicalities and the ethics of quickly flipping a company. Ethically, I tend to agree that “Flipping is Good“. But practically, there are a lot of moving parts in a company and lining them up for a quick windfall seems to require more than a bit of luck. It was in hopes of better understanding these practicalities that I read Basil Peters book Early Exits: Exit Strategies for Entrepreneurs and Angel Investors (But Maybe Not Venture Capitalists).

Many business books have only one good idea. This book has three, which is nice:

The business environment is in great shape for early exits – If you want to sell a company for $5-30 million, there are a lot of buyers, they have gotten easier to find, and the deals have gotten simpler. For many more businesses than in the past, an early exit is feasible.

Align your exit timeline with your investors to make an early exit possible – If you take traditional venture money, that is a commitment to swing for the fences. It can be very difficult to accept a $5-30 million exit after you have raised even seed money from a VC, because they are depending on your company to consume growth capital and deliver the kind of returns that their funds require.

Employ an outside party to manage the exit – The book really drove this point home, presumably because the author is making a career out of this role. It was an interesting perspective to me, not something I hear much about in the blogosphere, and something I’ll have to investigate further.

Unfortunately there were a few problems with the execution of the book:

Lack of rigor – Peters’s financial models are quite simple, and generally not backed up by broadly sourced data. The traditional-versus-early-exit model that makes the cover of the book and drives home the point about avoiding VC is purely hypothetical numbers, for example.

Canadian heavy - Writing about what you know is great, but more information about key geographies like the United States would have helped make the book more credible. There is plenty of research and statistics available, and the author only scratched the surface.

Simplistic Angels versus VCs viewpoint – There are a lot of opinions flying around about what makes someone a super-angel, or what makes a seed-stage VC firm. Suffice to say the book’s black and white distinction between angels and VCs is simplistic. I would have expected more reasoned discussion of investor types, given that investor alignment is a key point.

Insufficient detail – The later chapters in the book, notably around pricing, are insultingly light on detail. I realized that pricing is complicated and it’s best to work with a professional, but that’s no excuse for introducing net present value of cashflow and then leaving everything else as an exercise for a consult.

Too much of a commercial – I understand that the point of this book, and many others, is to promote the author’s services. However, there were too many pages dedicated to the need for such services, and too few to the nuts and bolts of what would be done or how value would be realized. That, in the end, is the real problem with this book. I was hoping the author would tell me more of what he knows, since I’ll probably never have the opportunity to hire him directly.

The author has a blog (angelblog.net), and it remains somewhat unclear to me why he put the effort into a book rather than sticking with the blog format. Much of the information in this book is available on his blog and around the blogosphere. I had been hoping for more new work, or more depth. Unfortunately I did not find it.

If you’re considering starting a company with an eye to early exits, it’s easier to read this book than to track down 100 good blog posts on the topic. Unfortunately, you’re going to need the blog posts either way to fill in the gaps.

2 Comments »

True, if you can enough money from a book to impact your lifestyle, and you aren’t making money blogging, then using your blog to get a book deal is reasonable.

On the other hand, if you are in a profession like investment banking or otherwise brokering mergers and acquisitions, as that author is, then a book on a narrow topic like this is unlikely to net you more income than a single additional deal would.

So the goal of the book must be to raise the author’s profile. I tend to agree with Penelope Trunk, that writing a book is no longer the best way to raise your profile: 5 Reasons why you should not write a book.